BHP Billiton chairman Jac Nasser said: "The demerger of South32 simplifies BHP Billiton’s portfolio while retaining the benefits of scale and diversification.
"We believe that the demerger will create two successful companies in BHP Billiton and South32."
The metals and mining company South32 will own a portfolio of mining assets, including alumina, aluminium, coal, manganese, nickel, silver, lead and zinc.
With its headquarters to be in Perth, it will have a regional head office and global shared services centre based in Johannesburg, South Africa.
In March, the company recommended that shareholders approve the proposed spin-off of its new mining group South32.
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According to the company, the total one-off costs of the demerger will be about $738m.
BHP Billiton believes that this segmentation could generate around $100m in savings a year, with 90% made by the end of 2017.
As at 31 December 2014, the South32 businesses consisted of gross assets of $26.7bn and contributed net profit after tax of $217m for the 12 months ending 30 June 2014.